The Government should look to self-employment to solve the NHS staffing crisis - and policy makers need to make the system work in order to achieve that, according to a new report.

The report, “The role of self-employed people in resolving workforce problems in the NHS”, finds that recent changes to IR35 are a barrier to adopting more flexible working practices in the health sector.

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The IR35 rules require public sector organisations such as the NHS to assess whether individuals should be taxed like employees. Determining IR35 status is complicated and the rules have caused confusion and disruption, leading to some health professionals refusing to work.

In October, the Government announced its intention to roll out the IR35 rules to the private sector in April 2020.

The report from IPSE and PPP (Public Policy Projects) makes several recommendations, including:

Employment compliance regulations such as IR35 should not be a hurdle to the development of flexible workforce models and the deployment of external expertise and capacity.

NHS Trusts need to consult with their HR services to better understand the issues to do with planning and managing their workforce, and NHS hiring managers must recognise self-employment as a model which can benefit their organisation.

A new contract needs to be approved by HMRC: a changing society will call for more flexible working practices.

There needs to be a new definition of self-employment recognised by HMRC and NHS employer bodies.

The report incorporates research into the impact of IR35, where studies found that 51 per cent of public sector hiring managers had lost skilled contractors as a direct result of the changes to IR35 regulations. A further 71 per cent also said they were now struggling to hold on to their contractors.

The Rt Hon Stephen Dorrell, PPP’s Chair,said: “We all know that staff shortage is a challenge facing virtually every NHS organisation (and many other employers in the economy). More flexible NHS employment practices are an important part of the response to that challenge, and this report is a timely reminder of the role professional self-employed people can play.”

Simon McVicker, IPSE’s Director of Policy, said: “This is a hugely significant and timely report. The NHS is one of this country’s most prized and praiseworthy institutions, but its ability to keep delivering is being undermined by overly rigid employment practices and its misguided approach to IR35 compliance. The NHS must recognise the contribution that self-employment can make and review its practices.

“The government should also consider the report’s findings very carefully. That the NHS has struggled with the implementation of IR35 is hardly surprising given the inherent flaws in the legislation. IR35 urgently needs to be reformed ahead of any extension of the rules to the private sector.”